Week in review.

Spinoff

Rjr Nabisco Acts To Feed Food Stocks

November 06, 1994|By Written by George Gunset.

In June the board of Philip Morris Cos. rejected a plan to separate its food business from tobacco operations, deciding that a food company standing alone wouldn't necessarily escape potential liability from smoking-related lawsuits.

The rejection forced the resignation of chief Michael Miles, who had headed Kraft Foods before its acquisition by Philip Morris in 1988.

On Tobacco Road last week, directors of RJR Nabisco Holdings Corp. decided to take the first step to spin off its food business in an attempt to unlock value supposedly hidden by investor concerns over government and consumer actions against cigaret companies.

The company said it would file for an initial public offering of a separately traded company called Nabisco Holdings Corp. The offering would consist of 45 million shares priced at $23 to $26 a share.

Analysts said food stocks are looking more attractive to investors as the industry's 1995 earnings are anticipated to be stronger than those of other industries. Nabisco had 1993 sales of $7 billion.